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Pro-Bush Puffery on Economy, Medicare

New ad claims Bush inherited an economy "already in recession" and that 41 million seniors "now have access to lower cost prescriptions." Wrong on both counts.

October 12, 2004

Modified: November 6, 2004

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Summary

 

The ad by the pro-Bush group Progress for America Voter Fund claims the economy was already in a recession when Bush took office, but the National Bureau of Economic Research (which dates business cycles) says the recession actually began in March 2001, after Bush took office in January.

The facts also get stretched when the ad claims "41 million seniors now have access to lower cost prescriptions (emphasis added)." Bush's new prescription drug benefit will cover seniors on Medicare for an extra premium of about $35 a month, but not until 2006. Even the currently available drug discount cards have been used much less than expected. Current enrollment is less than 5 million.

Analysis

 

There is a grain of truth to the two claims. But the ad misstates facts to puff up Bush's record both on the economy and Medicare.

PFA Voter Fund Ad

"Hand" 

Announcer: Has any president been dealt a tougher hand? An economy already in recession. Expensive healthcare. September 11.

President Bush held us together and began to hunt down the terrorists. The Bush tax cuts helped jumpstart an economy in recession and create nearly 2 million new jobs. Thanks to Bush 41 million seniors now have access to lower cost prescriptions and George Bush has made America safer.

Progress for America Voter Fund is responsible for the content of this ad.

Already in Recession?

It's not quite true, as the ad claims, that Bush inherited "an economy already in recession (emphasis added)." It would have been accurate to say Bush inherited "an economy on the verge of recession."

The National Bureau of Economic Research, a non-partisan group of mostly academic economists, set  the start date of the recession as March 2001, weeks after Bush took office on Jan 20. The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

To be sure, the rate of economic growth had slowed significantly at the time Bush took office, as the longest boom in US history drew to a close. Real Gross Domestic Product, a general indicator of economic performance, grew an an unimpressive annual rate of 2.1 percent in the final quarter of 2000, after actually contracting by half a percentage point in the previous quarter. But employment was still growing when Bush was sworn in, and the economy actually added 113,000 payroll jobs between January and March 2001, before starting to decline in April.

In fact, the NBER did not even make a determination that a recession had begun until 10 months after Bush was sworn in, and said that the downturn might not even have qualified as a recession until the attacks of September 11, 2001 exacerbated the nation's economic troubles. The NBER's Business Cycle Dating Committee said, "Before the attacks, it is possible that the decline in the economy would have been too mild to qualify as a recession. The attacks clearly deepened the contraction and may have been an important factor in turning the episode into a recession."

2 Million Jobs Created?

The ad also misleads when it says Bush's tax cuts "helped . . . create nearly 2 million jobs."  It is true that the economy has re-gained nearly 1.8 million jobs since the very bottom of the job slump in August of 2003.  But according to the Bureau of Labor Statistics, that still leaves the Bush administration with a loss of 585,000 jobs. And that's giving Bush credit in advance for an annual "benchmark revision" that won't be published until next February, when the BLS expects to revise the 2004 employment numbers upward by an estimated 236,000.

(NOTE: Nov. 6, 2004:  We originally reported the economy had re-gained 1.9 million jobs since August 2003. That was incorrect and we have corrected it above. In fact, at the time the Labor Department's preliminary estimate of September's payroll employment stood at just under 1.8 million more than it had in August, 2003, and that is the number we should have reported.)


 

The New Drug Benefits

Contrary to the ad's claim, it's not yet true that "41 million seniors now have access to lower cost prescriptions." It's true that Bush's 2003 Medicare Modernization Act (MMA) extends prescription drug coverage to seniors. But the new coverage does not fully go into effect until Jan. 2006.

The federally administered prescription drug discount cards were designed to fill the three-year gap, but as we've  reported , total enrollment has only reached 4.4 million -- over half of whom were automatically enrolled by their health maintenance organizations. The total is more than 3 million short of the number the administration predicted would be enrolled by the end of 2004.

 

Sources

 

"The Business-Cycle Peak of March 2001," National Bureau of Economic Research, 26 Nov. 2001.

"The Facts about Upcoming New Benefits in Medicare," US Department of Health & Human Services, fact sheet, undated.

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